Tuesday, April 25, 2017, 4:41 PM

On April 3, 2017, President Trump signed into law a rare Joint
Resolution of Congress under the Congressional
Review Act(“CRA”), which disapproved the Broadband Privacy Rules
adopted late last year by then-Chairman Wheeler’s Democratic-led Federal
Communication Commission (“FCC”), making final the rollback of the
controversial rules adopted during the last months of the Obama Administration.Beyond nullifying the rules themselves, the
Congressional disapproval provides little clarity and leaves many questions
unanswered regarding the privacy framework that will remain applicable to
providers of Broadband Internet Access Services, and with numerous moving parts
still in play, the question of who will regulate those privacy practices and
under what rubric, is very much an open question.

The FCC’s Broadband
Privacy Order(the “Order”), which we discussed in detail
following its release in October, applied a sweeping new privacy framework to
be administered by the FCC upon not only traditionaltelecommunications carriers and
interconnected VoIP providers offering voice services, which had been subject
to the Commission’s former Customer Proprietary Network Information (“CNPI”)
rules, but also upon providers of Broadband Internet Access Services (“BIAS”),
which the Commission previously had found were common carrier services under
its 2015
Open Internet Order.The
reclassification, the Commission concluded, subjected BIAS providers to Section
222 of the Communications Act, a provision that prior to the Wheeler FCC,
had been focused almost exclusively on the use of CPNI by voice providers, but
in which the Commission now found far broader authority to more generally
regulate the privacy and cybersecurity practices of broadband Internet access
providers.

The Order implemented new protections for CPNI, and added
specific protections for personally identifiable information (“PII”) and the
content of communications under a provision of Section 222 which the Wheeler
Commission found imposes an independent duty on carriers to protect the
confidentiality of customer proprietary information, beyond Section 222’s CPNI
requirements.Web browsing and mobile
application usage history were designated sensitive customer proprietary
information (“customer PI”) subject to heightened protection, including
customer opt-in for use of the data for third party marketing purposes, beyond
what the Federal Trade Commission (“FTC”) has concluded is customer PI.In addition to those new protections, the
Order also eliminated certain CPNI regulations for common carriers, such as the
annual CPNI certification and record-keeping requirements.

It is clear that
enactment of the CRA resolution means that these new broadband privacy rules
will no longer be effective, and any aspects of the rules that had not yet
become effective will never become so.Congress’s CRA rejection of the broadband privacy rules also has
continuing effect: it bars the FCC from reissuing any
substantially similar new rules as the broadband privacy rules that Congress
has disapproved, absent new Congressional authorization.Less clear is the extent to which broadband
providers will remain subject to Section 222 in the absence of implementing
rules.The Wheeler Enforcement Bureau
had used Section 222 to bring several high profile and controversial
enforcement actions against carriers for alleged data breaches when no specific
rules were in place, and shortly after adoption of the Open Internet Order released
an Enforcement Advisory on broadband provider privacy practices under
Section 222, pending adoption of formal rules.Both actions suggest that Section 222 could remain a residual source of
authority for the FCC to regulate BIAS privacy practices, even in the absence
of specific rules.

It is virtually certain, however, given prior statements
by Chairman Pai and Commissioner O’Rielly critical of Chairman Wheeler’s
expansive view of the FCC’s Section 222 authority, that the current FCC
Republican majority will avoid allowing the FCC to replace the FTC as a general
regulator of all personal data handled by broadband providers.Moreover, there is significant question as to
whether the new FCC, under Chairman Pai, has any intention of bringing
enforcement actions against broadband provider privacy practices under Section
222, to which, as a Commissioner during the Wheeler regime, Chairman Pai
vociferously objected.

While Section 222 continues to apply (at least in theory)
to broadband providers, since they remain currently regulated under Title II,
the absence of implementing regulations makes ongoing regulatory obligations of
broadband providers unclear.For the
time being, enforcement of broadband privacy protections of consumers will have
limited and unclear authority and virtually no clear boundaries.FCC enforcement activities, if any, will likely
be limited to literal CPNI violations, as statutorily defined under Section
222(c), with the Republican-led FCC refusing to enforce any breaches of data
security under Section 222(a), as the FCC had done in high profile Enforcement
Bureau actions brought under Chairman Wheeler.

The elephant in the room, however, is that if the current
FCC leadership does decline to police broadband privacy practices under Section
222 – either because Section 222 does not provide such authority (particularly
after the CRA rejection of the FCC’s broadband privacy rules) or simply as a
discretionary matter it declines to apply what authority it does have – then
the privacy practices of broadband providers, at least at present, will be
subject to no federal oversight.This is
because post-reclassification, broadband Internet access services are outside
the scope of the FTC’s unfair and deceptive practices oversight authority,
under the communications common carrier exemption to Section 5 of the FTC Act.To further complicate matters, the FCC’s
reclassification of broadband Internet access services as a common carrier
service, while initially sustained by the D.C. Circuit, remains unsettled,
pending resolution of petitions for an en
banc rehearing of the DC Circuit order, and any subsequent petitions for
certiorari to, or review by, the Supreme Court.Moreover, a decision en banc overturning
the broadband common carrier classification would only clarify matters for
providers that are not otherwise providers of common carrier services, such as
some cable operators and stand-alone providers of mass market high-speed
Internet access services.These
providers would, once again, become subject to the FTC’s Section 5
jurisdiction.

But for wireless carriers and phone companies that provide
broadband services, even if broadband Internet access services are reclassified
as a non-common carrier offering, the FTC’s hands will continue to be tied with
regard to common carriers.This is
because its jurisdiction to regulate common carriers for even non-common
carrier activities remains in question pending resolution of the 9th
Circuit’s ruling in FTC v. AT&T
Mobility LLC that the common carrier exemption in Section 5 of the FTC
Act is a status-based exemption barring any FTC oversight of common
carriers.The FTC has a pending petition
for rehearing en banc of the 9th
Circuit decision.

Regardless, the talk in Washington is of ways to fill this
regulatory void.Acting FTC Chairman
Ohlhausen has urged Congress to give back the FTC’s power to actively police
broadband providers’ privacy practices by rescinding the reclassification of
broadband Internet access or lifting the FTC’s common carrier exemption.Moreover, a group of Democratic Senators,
led by Senator Markey (D-Mass.) recently
introduced a bill that would give the FCC explicit authority to adopt
broadband privacy and cybersecurity regulations.In addition, Senator Blumenthal (D-Conn.) separately
introduced a bill, the pointedly named “Managing Your Data Against Telecom
Abuses (MY DATA) Act,” to restore FTC jurisdiction over broadband provider
privacy practices.So far, however,
there is no indication of bipartisan support to fill the gap, and, in the
absence of Republican support, the odds are long that either of these measures
will pass in a Republican-controlled Congress, or be signed into law by
President Trump.At the same time,
according to a
recent report of the National Council of State Legislatures, states may be
stepping in to fill the gap:at least 12
states are considering legislation to adopt broadband privacy protections for
consumers following the CRA disapproval of the FCC’s broadband privacy rulesand in the absence of clarification at the
federal level, state broadband privacy regimes may take on increased
significance as the only game in town.

For those keeping score, the CRA is obviously a big
win for broadband providers (Verizon, AT&T, and other large broadband
providers, especially those with edge provider affiliates), which argued
strongly that such privacy rules should be adopted uniformly across the
Internet ecosystem, not advantaging one set of providers (edge providers) over
another (broadband providers), by imposing opt-in requirements for use of
consumer PI for digital advertising for some but not for others.These providers are now free from the FCC’s
broadband privacy regulations and, at least in the short term, from FTC
regulation until the FTC common carrier exemption is conclusively addressed by
the courts or Congress.On the other
hand, the CRA may be considered something of a loss for the leading edge
providers such as Google and Amazon, since the decision will likely mean more
formidable competition from broadband providers for a piece of the profitable
online advertising revenue pie.